Oil hovers below $100 as Trump signals progress in Iran talks

Oil prices remained below $100 per barrel on Wednesday, as investors evaluated signs of diplomatic progress between the United States and Iran, and the potential for improved Middle Eastern crude supplies. Brent crude futures, the global benchmark, climbed 0.2% to $99.48 a barrel, while U.S. West Texas Intermediate futures slipped 0.2% to $90.34 per barrel.

Both contracts experienced a decline of over 1% in the previous session, with Brent settling below $100 for the first time since September 8. Despite this recent correction, oil prices have still surpassed a 60% increase compared to the beginning of the year, according to analysts at ING.

U.S. President Donald Trump claimed on Tuesday that he could "annihilate" Iran, but also stated that his team had engaged in a "very good" and productive three-hour meeting with Iranian representatives in New York. These remarks prompted hopes that negotiations could eventually resolve the conflict and alleviate disruptions to crucial oil flows throughout the Gulf region.

Iran has indicated a willingness to reopen the Strait of Hormuz within a week if Washington reduces military pressure and lifts its blockade of Iranian ports. However, Tehran has not officially confirmed a formal agreement to do so. The Strait of Hormuz is a critical focus for oil markets, as it transported approximately one-fifth of global oil and liquefied natural gas supplies before the conflict began.

Recent tanker movements suggest an increase in oil and gas flows, although shipping risks are still elevated. Saudi Arabia has also resumed operations at its east-west pipeline, which can transport crude to the Red Sea port of Yanbu, bypassing the Strait of Hormuz. The pipeline had been halted following a drone attack earlier this month, with full capacity expected to be restored in six to eight weeks due to repairs at damaged pumping stations.

The pipeline's daily capacity stands at about 7 million barrels, but this may be reduced as repairs are completed. The increased inventory of U.S. crude, which rose by 1.7 million barrels last week, added downward pressure on oil prices, as forecasts had anticipated a 578,000-barrel draw.